Appealing To the Masses: QandA With Oracle President Charles Phillips

As it is with the other enterprise-software players, the SMB market is in Oracle's sights. And like its rivals, Oracle is turning to the channel to increase the sales footprint needed to reach this segment of the market. The Redwood Shores, Calif., company recently began allowing partners to resell its business applications, of which several -- Oracle E-Business Suite Special Edition and J.D. Edwards OneWorld -- are designed specifically for small and midsize customers. Oracle president Charles Phillips is helping to oversee the SMB efforts and steer Oracle's toward continued profitability. Phillips recently spoke with VARBusiness managing editor/technology Carolyn A. April about a number of initiatives the vendor has under way.

VB: How would you characterize Oracle's SMB strategy?

Phillips: We are in a stronger position to go after the midmarket than we've ever been. Frankly, we already have been stronger than most people thought. We recently classified our applications customers; of 30,000 of them, more than 19,000 are in the SMB space. We are making that part of our ad campaign, to show just how big of a player we are there.

Our products are more flexible and easier to implement than SAP's, and for that reason we routinely beat SAP in that SMB segment. SAP has a reputation as a big, global applications company, so many customers have interpreted that as, "It's not for me." And rightly so -- it's a complex product.

We see SMB as a growth market. We have plenty of products there, and now our issue is distribution, which is our only limit on growth. Our products are taken care of, we have resellers that want to work with us, and we are eager to bring on more partners. We have cleaned up the partner program and taken steps to make it more mainstream in terms of lead generation. Our partners used to do their separate events, and we'd do ours; now everything we do is with partners.

VB: What's left to do on the distribution side?
Phillips: I believe the next phase is enablement. We need better and deeper training for partners. Today we have built a team specifically for [training] the applications partners because they don't all necessarily have the skill sets to sell the products.

VB: Is there a place for Oracle software among the smallest of the SMB companies?
Phillips: I was just in Phoenix yesterday, and I did one small company visit with about 40 people. They were running Oracle eBusiness Suite, and they have been for several years. Is it where we target? No. But when you get to $5 million to $10 million in revenue, that's where we start to play.

VB: How have things been going since Oracle's decision to open up the applications side of the business to the channel?
Phillips: We are getting a lot of interest from channel partners signing up and asking questions and raising their activity level. We are getting calls from our side of the channel about IBM [and its partners] once again selling J.D. Edwards software. We are serious about this effort and have a lot of resources there to support the channel. Some resellers say, "Wouldn't it be nice if I had one partner with a couple of products that can meet the same customer needs?" They like that we have Oracle [eBusiness Suite] and J.D. Edwards positioned to do both.

Also, we took the technology that our internal consultants use to rapidly implement our products, the Oracle Accelerators, and formalized it into IP that we give away to our partners now to use [when deploying applications]. There are about 1,200 business flows that ask customers' questions about their businesses and in about an hour generate the right product instance for them.

NEXT: Oracle's managed-services strategy.

VB: Managed services are expected to play a big role in the SMB space. What is Oracle's strategy there?
Phillips: We have partners who host our applications and, of course, we host as well. We have a business model for the partners to host our applications. Some want to sell the hosting services, and they have it in their toolkits, but we host it for them.

VB: You just bought Portal Software. It seems Oracle's the poster child for acquisitions. What other holes is the company looking to plug?
Phillips: I would say we are interested in industry domain expertise and industry content. We have critical mass on the horizontal stuff. We will likely see smaller acquisitions, but we will nonetheless do more of them.

VB: In the SMB space, what do see as the competitive landscape? Microsoft? SAP? Sage?
Phillips: We don't see Sage all that much. In fact, they partner with us and work with us to move their applications over to our database platform. We have been surprised by how little we see Microsoft. We were worried a few years ago after all the acquisitions they made. But it's taken them longer than anticipated to revamp products, even the newer Dynamics stuff we aren't seeing. They haven't focused on that part of the business. SAP is making some noise, but they still have a product problem. Theirs is a very heavy product for this part of the market. Also, we've seen them retrench from the channel relative to what they were saying a year ago. Our partners were more likely to run into an SAP direct rep in the last 12 months. That tells me that their channel program is either not working or they are not satisfied with it.